Our Trend Analyzer (available to Bespoke Premium and Bespoke Institutional members) highlights how stocks and ETFs are trending and how overbought or oversold they are from a timing perspective. It’s a very useful way to quickly analyze the health of a specific portfolio or any basket of stocks and ETFs.
Below is a snapshot of our Trend Analyzer showing regional ETFs that cover equity markets around the world. You can see that most of these ETFs are down YTD and below their 50-day moving averages, but they have bounced over the last 5 trading days. On the right side of the snapshot, the dot for each ETF represents where it’s currently trading relative to its 50-day moving average (the black, vertical “N” line). The tail end of the dot represents where it was trading a week ago. When the dot is in the green zone, the ETF is “oversold” relative to its normal trading range, while a dot in the red zone means the ETF is “overbought.”
Last week at this time, every single regional ETF shown was in oversold territory, with many at extreme levels (the dark green section). Over the last week, though, we’ve seen a big bounce off of oversold levels, as evidenced by the long tails with the dots to the right of the tails. Stocks globally remain in longer-term downtrends, but at least they’ve caught a bid over the last week. Bulls are hopeful this is the start of a meaningful rally.